Stochastic Silver Trading System
This tutorial should be called: Combining Stochastics with other Indicators, but Stochastic Silver System sounds real nice.
Stochastic Oscillator technical indicator can be combined with other indicators to form a trading system. For our example we will combine it with:
- RSI
- MACD
- Moving Averages XAGUSD Trading Technical Indicator
Example 1: Silver Stochastic Trading System
Sell Silver Trading Signal Generated using Stochastic Trading System
From our silver trading system the sell xagusd trade signal is generated when:
- Both Moving Averages are moving down
- RSI is below 50
- Stochastic heading downwards
- MACD heading downward below center-line
The sell silver signal was generated when all these silver trading rules were met. The exit silver signal is generated when a trading signal in opposite direction is generated i.e. When the indicators reverse.
The good thing about using such a xagusd system is that we are using different types of silver indicators to confirm the trade signals and avoid as many whipsaws as possible in process.
- Stochastic - is a momentum oscillator xagusd technical technical indicator
- RSI- is a momentum oscillator xagusd technical technical indicator
- Moving Averages Technical Indicator- is a silver trend following xagusd technical technical indicator
- MACD- is a silver trend following xagusd technical technical indicator
It is very useful to combine more than one silver indicator, as a combination of silver trading signals is better than relying on just a single xagusd indicator. The xagusd technical trading indicator combinations reinforce each other, and cancel out false whipsaw silver signals.
A silver trend following indicator helps a trader to see the overall picture, while using more than one momentum silver technical indicator gives better and more reliable entry & exit points for trading silver.
The silver indicators combinations and their silver trading signals help to decipher a lot of the xagusd trading market activity.
Example 2: Stochastic Trading System
Buy Silver Trading Signal Generated using Stochastic System
For this example the silver trend is clearly upward, but at some point there were a few silver trading whipsaws generated by the stochastic oscillator silver technical indicator, can you spot them? - So the question is how can a trader avoid trading these silver trading whipsaws?
Well, the answer is that by looking at the other technical silver indicators such as MACD indicator a trader could have avoided the whipsaw, even the MACD technical indicator had not given a crossover silver signal although it was very close to the zero center line level, at the same time the gradient at which moving averages technical indicators turned was not so sharp as to warrant a decisive silver market trend reversal. Well the thing is that it’s not so obvious when it comes to recognizing silver market whipsaws: it is a skill that takes some time but after some time you can spot whipsaws from a mile away.
One tip is that as long as MACD indicator is above zero center-line even if the MACD lines are heading downwards then the silver trend is still upwards. As you can see from the above example MACD indicator never went below zero line and afterwards the upward silver trend continued with the MACD xagusd technical technical indicator maintaining above Zero line and continuing to move upward.
During ranging silver markets Stochastic Oscillator indicator will give the fastest silver trading signals which are prone to whipsaws. This is why stochastic oscillator indicator is best combined with other indicators & the silver trading signals traded are confirmed by another one or two other Silver indicators.
